AP Business Writer Alex Veiga
LOS ANGELES (AP) – Homeowners are retreating even more out of reach for most Americans as rising mortgage rates and rising prices stretch the limits of what buyers can buy.
Home buyers are currently required to make at least $114,000 a year to provide a $431,250 home, according to data released Thursday by Realtor.com.
The analysis assumes that home buyers will pay a 20% down payment, covering the remaining funds of their purchases on a 30-year fixed-rate mortgage, and that the buyers’ housing expenses will not exceed 30% of their monthly total income.
Based on the latest US median home listing prices, home buyers will need to make $47,000 more per year than they only six years ago. At the time, the median top homes in the US was $314,950, with an average 30-year mortgage rate of around 4.1%. Prices averaged 6.76% this week.
The annual income required to buy a median priced US home first reached six figures in May 2022, and has not fallen below that level since. According to the US Census Bureau, the median household income was approximately $80,600 a year in 2023.
In some metro regions, including San Francisco, Los Angeles, New York and Boston, the median home top has the annual income needed to pay $200,000. In San Jose, it costs over $370,000.
Rock-bottom mortgage fees have driven a war of bidding in homes that over-fished the housing market during the pandemic and pushed up sales prices above the seller’s initial asking price. U.S. home prices rose more than 50% between 2019 and 2024.
The U.S. housing market has been in a sales recession since 2022, when mortgage rates began to rise from lows during the pandemic era. Sales of previously occupied US homes fell to their lowest levels last year in nearly 30 years. In March, they recorded their biggest monthly decline since November 2022.
That’s not all bad news for future home buyers.
Home prices are rising much more slowly than the pandemic housing market frenzy. The national selling price of a previously occupied US home rose 2.7% in March from the previous year, to a record high of $403,700 in March, the lowest annual increase since August.
According to Realtor.com, the median price of homes listed for sale in April rose just 0.3% from the previous year.
Buyers who can pay current mortgage fees have a wider range of properties than a year ago.
According to Realtor.com, the tally includes all homes in the market except for those with pending sales, which have their final sale pending, soared 30.6% last month. Homelists jumped between 67.6% and 70.1% in San Diego, San Jose and Washington, DC
As property takes longer to sell, more sellers are lowering their asking price. About 18% of listings were cut last month, according to Realtor.com.
“Sellers are becoming more flexible with pricing that is highlighted in the price reduction we see. The higher the mortgage rate, the heavier, but the silver lining is that the market is beginning to rebalance.” “This could create opportunities for ready buyers.”
Original issue: May 2, 2025 9:32am EDT
